Best of the Week
Most Popular
1.Bitcoin War Begins – Bitcoin Cash Rises 50% While Bitcoin Drops $1,000 In 24 Hours - Jeff_Berwick
2.Fragile Stock Market Bull in a China Shop -James_Quinn
3.Sheffield Leafy Suburbs Tree Felling's Triggering House Prices CRASH! - Nadeem_Walayat
4.Bank of England Hikes UK Interest Rates 100%, Reversing BREXIT PANIC Cut! - Nadeem_Walayat
5.Government Finances and Gold - Cautionary Tale told in Four Charts - Michael_J_Kosares
6.Gold Stocks Winter Rally - Zeal_LLC
7.The Stock Market- From Here to Infinity? - Plunger
8.Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - MarketsToday
9.Electronic Gold: The Deep State’s Corrupt Threat to Human Prosperity and Freedom - Stewart_Dougherty
10.Finally, The Fall Of The House Of Saud - Jim_Willie_CB
Last 7 days
Universal Credits Christmas Scrooge Nightmare for Weekly Pay Recipients - 18th Nov 17
Perspective on the Gold/Oil Ratio, Macro Fundamentals and a Gold Sector Bottom - 18th Nov 17
Facebook Traders: Tech Giant + Technical Analysis = Thumbs Up - 18th Nov 17
Games Betting System For NCAA Basketball Sports Betting - Know Your Betting Limits - 18th Nov 17
Universal Credit Doomsday for Tax Credits Cash ISA Savers, Here's What to Do - 18th Nov 17
Gold Mining Stocks Fundamentals Q3 2017 - 17th Nov 17
The Social Security Inflation Lag Calendar - Partial Indexing - 17th Nov 17
Mystery of Inflation and Gold - 17th Nov 17
Stock Market Ready To Pull The Rug Out From Under You! - 17th Nov 17
Crude Oil – Gold Link in November 2017 - 17th Nov 17
Play Free Online Games and Save Money Free Virtual Online Games - 17th Nov 17
Stock Market Crash Omens & Predictions: Another Day Another Lie - 16th Nov 17
Deepening Crisis In Hyper-inflationary Venezuela and Zimbabwe - 16th Nov 17
Announcing Free Trader's Workshop: Battle-Tested Tools to Boost Your Trading Confidence - 16th Nov 17
Instructions to Stop a Dispossession Home Sale and How to Purchase Astutely at Abandonment Home - 16th Nov 17
Trump’s Asia Tour: From Old Conflicts to New Prospects - 16th Nov 17
Bonds And Stocks Will Crash Together In The Next Crisis (Meanwhile, Bond Yields Are Going Up) - 16th Nov 17
A Generational Reset That Will Redistribute Wealth to the Bottom 60% Is Near - 16th Nov 17
Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - 16th Nov 17
Gold’s Long-term Analogies - 16th Nov 17
Does Stripping Streets of ALL of their Trees Impact House Prices (Sheffield Example)? - 15th Nov 17
The Trump Administration’s IP Battle Against China - 15th Nov 17
5 Ways Bitcoin can Improve its Odds of Becoming the Future of Money - 15th Nov 17
These Headlines Say Gold is Building a Base for Something Big - 15th Nov 17
Protect Your Savings With Gold: ECB Propose End To Deposit Protection - 14th Nov 17
Gold on the Ledge, Trend Forecast - 14th Nov 17
The Unbearable Slowness Of Fourth Turnings - 14th Nov 17
Silver Sign’s Confirmation & More - 14th Nov 17
Could This Be The End for Tesla? - 14th Nov 17
Harry Dent’s Fourth Cycle: More Evidence of Stock Market Downturn - 14th Nov 17
Why Having Good Credit Is Important If You Want to Invest - 14th Nov 17
The Bitcoin Bubble Explained in 4 Charts - 13th Nov 17
How the US Has Secretly Subsidized China to Produce Eco-Unfriendly Solar Panels - 13th Nov 17
The Increasingly Unstable Middle East Must Be On Every Investor’s Radar - 13th Nov 17
Stock Market Critical Supports are Being Challenged - 13th Nov 17
The One Chart All Investors Should See Before 2018 - 13th Nov 17
Short-Term Stock Market Uncertainty Following Recent Rally, Will Stocks Continue Higher? - 13th Nov 17
Is Hillary Just the “Fall Guy” for the Intel Agencies and their Moneybags Bosses? - 12th Nov 17
Stock Market Correction Phase - 12th Nov 17
Finally, The Fall Of The House Of Saud - 12th Nov 17
Bitcoin War Begins – Bitcoin Cash Rises 50% While Bitcoin Drops $1,000 In 24 Hours - 11th Nov 17
E-franc, E-krona... E-volution? - 11th Nov 17
Gold Investment Stalled - 11th Nov 17
Smart Ways to Get Loans Online - 11th Nov 17
What Can Pot Teach Us About Economics and Government? - 10th Nov 17
Can Stocks and Bonds go Down at the Same Time? - 10th Nov 17
Gold Market 2017 Will We See a Replay of 2015 and 2016? - 10th Nov 17
Oil markets turn bullish with shift to backwardation - 10th Nov 17
The Strange Behavior of Gold Investors from Monday to Thursday - 10th Nov 17
Where to Start Your Cryptocurrency Company - 10th Nov 17

Market Oracle FREE Newsletter

Forex Trading Free Week

Central Bankers Stoking the Inflation Fires, Whilst Academic Economists Worry about Deflation

Stock-Markets / Financial Markets 2010 Aug 15, 2010 - 12:00 AM GMT

By: Nadeem_Walayat

Stock-Markets

Best Financial Markets Analysis ArticleThis week the Bank of England Governor Mervyn King realised that his attempts at talking inflation down have failed and that now 8 months on he is looking rather foolish by continually stating that high inflation is just temporary, where even the mainstream press that had been lapping up the mantra are now no longer taking him seriously, so now the Governor is suggesting that inflation will remain above the 2% target level for the whole of 2011 (current CPI 3.2%, RPI 5%) which translates into watch for UK CPI to go above 4% and and RPI above 6% during 2011, in line with my expectations since early May.


Meanwhile the BoE pumped out its quarterly Inflation propaganda report labeled as a forecast to try and get ordinary folks and business to buy its story so as to make the outcome of 2% inflation and trend economic growth more possible.

Most people remain in denial of the Inflation Mega-trend as witnessed by a continuing debate between deflation or inflation when the facts are that of accelerating inflation. Surprised by out of the blue food price crisis? Read the Inflation mega-trend ebook (FREE Download).

Deflationists remain just as delusional today as when I wrote in November 2009 (18 Nov 2009 - Deflationists Are WRONG, Prepare for the INFLATION Mega-Trend ). Instead of realising that they are wrong and do something to save themselves and their readers from going broke by holding cash and invested in bubbles destined to burst such as government bonds under the weight of ever escalating money printing or quantitative easing, 1, 2, 3, 4, quadrillion, they instead ignore CPI inflation (unless its falling) and come out with nonsense such as pricing assets in terms of the gold price to imply deflation is taking place when peoples food baskets i.e. the REAL WORLD show INFLATION is accelerating away from them , or in some cases implying that inflation is really deflation in disguise because of loss of purchasing power, which is the whole point of what inflation IS ! Where prices rise to erode the purchasing power of your savings and earnings! I hear weak economies mean deflation looms, well try telling that to Zimbabweans!

Do a simple personal inflation test, dig out your credit card statements from 1,2,3 years ago and see how much your food and energy bills have gone up and then you will know how much inflation has taken place during a period of perma deflation mantra. Never mind the amount average food baskets are destined to rise in price going forward!

LISTEN , protect your wealth from the inflation mega-trend by hedging in scarce resources such as Gold, Silver, Agricultural and other Foods, metals, energy, stocks of dividend cash cows, emerging markets and more as elaborated at length in the Inflation Mega-trend ebook, now 7 months on we are further along the inflation mega-trend with no signs of reversal into the phony debt deleveraging deflation mantra that we have been hearing about for several years now that has FAILED to materialise, there IS NO DEFLATION, the deflation mantra will continue right up to the point where the wage price spiral kicks in as it slowly dawns on the academic economists / perma crowd that their theories are just as bankrupt as most of the western economies actually are! But by which time your savings will have been wiped out by following the perma deflationists mantra of "cash is king". Yes I am being blunt because sometimes you have to be to knock some sense into people!

Meanwhile David Cameron's government scrapped another quango, the National Audit Commission, that's 2000 bureaucrats set to disappear in a puff of smoke, most of whom will be replaced by the private sector. The next 6 months are crucial for the UK to see if the coalition government is able to deliver the promised cuts and deficit reduction targets, if not then the UK will be firmly back on the trend towards bankruptcy and hyperinflation that Labour had set it up on with sterling following the dollar to its final destination. Fingers crossed that UK official debt stabilises at 70% of GDP (and the unofficial debt and liabilities at 350% of GDP).

In the U.S. the prospects for QE2 is coming as a surprise in many quarters when it has been obvious since the first print run that once started money printing cannot be stopped whilst large budget deficits exist, which where the U.S. is concerned probably means continuing for the next 10 years at least as the U.S. is going to milk its reserve currency advantage to the fullest.

Germany Booming

German Q2 GDP data came in at 2.2% annualised to 8.8%, another surprise for the mainstream press and analysts that had penciled in growth of between 1% and 1.2%, where even the likes of Martin Wolf of the FT has consistently been making bearish statements such as this -

Financial Times, Martin Wolf is worried that the concerted austerity of Germany, Britain and other industrialised countries may "destroy the recovery".

Germanys economic boom is the flip side of the PIGS sovereign debt crisis as I have been mentioning since at least early early May 2010 (05 May 2010 - Greece Economic Depression Resulting in INFLATION NOT DEFLATION Surge ) and in my last opportune newsletter (09 Aug 2010 - UK Economy GDP Growth Forecast 2010 to 2015).

Bottom line - The large industrialised export orientated areas of the Eurozone such as Germany are going to BOOM! Therefore the PIGS sovereign debt crisis is old news. The U.S. looks set to experience sluggish growth.

Stock Market

The Dow having reached my long-standing target of 10,700 spent 7 trading days attempting to hold the level and break higher which it repeatedly failed to do, finally support giving way from the open on the 11th of August. The most recent price action has attempted to hold 10,250 with the Dow closing at 10,303. However the Downtrend from 10,700 targets 10,100 as a possible low point for the current swing so the most recent action can be seen as an attempt at working out the oversold state before another short down swing to form a base in the 10,100 region to again target a break above 10,700, my in depth analysis remains pending time.

Pakistan Floods

Pakistan Floods put everything into perspective, 20 million face losing everything in a disaster of biblical proportions.

UK Donations

USA Donations

Your analyst.

Comments and Source: http://www.marketoracle.co.uk/Article21899.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-10 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Featured Analysis of the Week

Stocks, Housing and Economy, Mass Delusion American Style - 14th Aug 10 - James_Quinn
Double Dip Recession, Keynesianism Is Dying - 14th Aug 10 - Gary_North

Deflation Report

No August Surprise, Just a Modern Day Jubilee Debt Collapse - 14th Aug 10 - David_Knox_Barker
Innovation, What Made America Great is Now Killing Her! - 13th Aug 10 - Gordon_T_Long
The Real Reason for the Bank of England's Worthless CPI Inflation Forecasts - 13th Aug 10 - Nadeem_Walayat
The U.S. Econonomies Future
Japanese Style Deflation Fear Strikes Global Bond Markets - 12th Aug 10 - Gary_Dorsch
Stock Market Performance, The Efficient Transfer of Wealth - 12th Aug 10 - Doug_Wakefield
Protect Your Wealth From the Government, Expatriate Your Wallet - 12th Aug 10 - Terry Coxon
Buy and Sell Gold On-line Securely
Gold and U.S. Treasury and Mortgage Bonds Naked Shorts As Liquidity Machine - 12th Aug 10 - Jim_Willie_CB
Bullish Outlook for European Economies, U.S. QE2 Problems - 11th Aug 10 - GaveKal
Stocks or Gold, What's Real? - 10th Aug 10 - Steve_Betts
Stock Market Crash Report - FREE
The Deflation Bogey - 10th Aug 10 - William_Anderson
Cutting Government Spending Is So Hard to Do - 9th Aug 10 - Grant M. Nülle
UK Economy GDP Growth Forecast 2010 to 2015 - 9th Aug 10 - Nadeem_Walayat
Get Your Free 50-Page Download: The Ultimate Technical Analysis Handbook
America's Middle Class in Crisis - 9th Aug 10 - PhilStockWorld
Pensions Liabilities Problem and China Instability - 7th Aug 10 - John_Mauldin
U.S. July Employment Situation, Lackluster Private Sector Job Growth Once Again - 7th Aug 10 - Paul_L_Kasriel
Buy and Sell Gold On-line Securely
Keynesians, Fiat Currency, Until Debt Does Them Part- 6th Aug 10 - Brady Willett and Dr. Todd Alway
Will Quantitative Easing Spur Inflation? Job Creation? Credit Expansion? Do Anything? - 6th Aug 10 - Mike_Shedlock
Economy Heading for a Systemic Collapse into Hyperinflationary Great Depression - 5th Aug 10 - John Williams

Most Popular Financial Markets Analysis of the Week :

1. UK Economy GDP Growth Forecast 2010 to 2015

By: Nadeem_Walayat

This analysis is a continuation of the UK Debt Forecast article (UK ConLib Government to Use INFLATION Stealth Tax to Erode Value of Public Debt ) on the impact of the new coalition government having effectively hit the reset button on the UK economy to now primarily target a reduction in the £156 billion annual budget deficit which aims to suck £113 billion a year out of the economy by 2015-16 by means of swinging public sector spending cuts and tax rises. The government has now clearly reversed the Labour governments policy of continuous fiscal expansion and set the country on a course for severe fiscal contraction for at least the next 3 years.

Read Article

2. The Horrific Derivatives Bubble That Could Destroy Entire World Financial System

By: Michael Snyder

Today there is a horrific derivatives bubble that threatens to destroy not only the U.S. economy but the entire world financial system as well, but unfortunately the vast majority of people do not understand it. When you say the word "derivatives" to most Americans, they have no idea what you are talking about. In fact, even most members of the U.S. Congress don't really seem to understand them. But you don't have to get into all the technicalities to understand the bigger picture.

Read Article

3. Marc Faber Fed's Printing Press to Create Final Crisis and Crash

By: Marc Faber

"Investors should've listened to me already six months ago, when I wrote that the Fed will continue to monetize, and this is my view ... they will print and print and print, until the final crisis wipes out the entire system," Marc Faber, editor & publisher of The Gloom, Boom & Doom Report, told CNBC. David Bloom from HSBC joined the discussion, adding, "I think we're not quite at those draconian points."

Read Article

The U.S. Econonomies Future

4. America's Middle Class in Crisis

By: PhilStockWorld

Very nice reading in the Financial Times this week.
One of my favorite topics since I themed the year with our 2010 Outlook "A Tale of Two Economies" and in the years before that I’ve been bitching about the topic of wealth disparity in America to the point where even arch-Conservatives Alan Greenspan and David Stockman are now forced to agree with me.  So that’s two down, 99,999,998 to go! 

Read Article

5. ALERT: Environmental and Health Impacts of the BP Gulf Oil Spill

By: Dr_Tom_Termotto

THE COMING OF THE BLACK WAVE

Nothing in our shared cultural experience will prepare us better for the oncomingBlack Wave throughout the Gulf of Mexico than the Exxon Valdez Oil Spill in Prince William Sound, Alaska. And yet even this environmental catastrophe falls far short of what is coming around the corner in the Gulf. Alaska is not Florida, or Louisiana, or Texas. The Deep South summer here in Tallahassee, FL has been as hot and humid as any we’ve seen. This weather pattern is what will distinguish the BP Gulf Oil Spill from the Exxon Valdez just as the total volume of the spill and use of dispersants have.

Read Article

6. China Enters the Gold Market

By: Richard_Daughty

There was an editorial power struggle at Mogambo News Service over whether it was Big, Big News (BBN) or if it was Big Freaking News (BFN), or even if it was The Biggest Freaking News Of Your Life (TBFNOYL) that China has, officially through the People's Bank of China, said that they have "seen the light" as concerns gold, and they see how gold is the only true money, and how worthless paper monies and computer blip monies are the Wrong Way To Go (WWTO), as evidenced by the Chinese merely looking at us Americans and what happened! Hahaha!

Read Article

7. Pensions Liabilities Problem and China Instability

By: John_Mauldin

Sadly, I find myself with more than enough time to compose yet another Thoughts from the Frontline in an airport, as a flight booking error has me at JFK for six hours instead of fishing in Maine. Details for those interested or amused at the end. But it does allow me to offer you a peek into a very sobering report on how badly underfunded public pension are.

Read Article

8. The Real Reason for Bank of England's Worthless CPI Inflation Forecasts

By: Nadeem_Walayat

The Bank of England released their latest quarterly inflation report this week that again sought to revise the forecast for UK inflation to converge towards 2% in 2 years time. However one major change accompanying the forecast was that the mantra of UK inflation being above the 2% target and the 3% upper limit as only temporary has now been dropped, this after repeatedly claiming month in month out for the past 7 months that Inflation would magically fall that the academic economists and mainstream press had swallowed up until quite recently.

Read Article

Subscription

How to Subscribe

Click here to register and get our FREE Newsletter

About: The Market Oracle Newsletter

The Market Oracle is a FREE Financial Markets Forecasting & Analysis Newsletter and online publication.
(c) 2005-2010 MarketOracle.co.uk (Market Oracle Ltd) - The Market Oracle asserts copyright on all articles authored by our editorial team. Any and all information provided within this newsletter is for general information purposes only and Market Oracle do not warrant the accuracy, timeliness or suitability of any information provided in this newsletter. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We recommend that independent professional advice is obtained before you make any investment or trading decisions. ( Market Oracle Ltd , Registered in England and Wales, Company no 6387055. Registered office: 226 Darnall Road, Sheffield S9 5AN , UK )


© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

christian
15 Aug 10, 07:47
how much "inflation" do central banker's really create vs. commercial banks

seems to me at least in the USA....regarding the "credit supply"....the fed DOESNT create much inflation.....compared to the commercial banks...i.e lenders

yes there actions stopped a deflationary collapse..and they may have "set the stage for"...cept for the little tibbit about incentivizing parking excess reserves at the fed for a risk free chunk of change..but they can only set the interest rate.....and create an alphabet soup of liquidity programs....but they can't or won't directly effect the BANK LENDING INTO THE ECONOMY.

banks aren't increasing lending...commercial bank lending continues to contract.....i imagine loan loss reserves are very high ....for another wave of foreclosures and CRE losses....as well as a possible memo given to CEO's that this was your last bailout for a while.

so really the central bankers are trying to stoke asset price inflation..but the country's that could sustain higher asset prices may be the one's where the domestic macro economy is stronger as foreign investors and their capital flows sort this out.....but the only "US" company's worth investing in ...are the one's that do most of their business in foregin lands that pay out high dividends. But even they will be subject to the overall swing of the domestic markets.

US equity markets should see foreign direct selling of equities into country's with stronger fundamentals and country's with better debt structures. It's clear that the macro economy's emporer of recovery is down to his skivvies already.

A NEW large handout i.e stimulus in the form of gift cards....and continually extending unemployment benefits could help keep the economic indicators out of double dip talk for another several months and thus allow the us stock market to continue to reap the rewards of the global financial liquidity surplus...but it seems there is no appetite to use these means to kick the can down the road. And obviously this is not a recipe for a strong economy and jobs creation but kickin the can down the road is something the political one trick ponies should have down pat. stimulate the damn domestic consumption economy or captial flows should go to stronger foregin equity markets.


Alfred Warschauer
15 Aug 10, 15:57
Bernanke's "Mein Kampf"

Nadeem

Your hyperinflation hypothesis is supported by this article from Faber's bulletin in 2006

http://www.gloomboomdoom.com/public/pSTD.cfm?pageSPS_ID=1400

The one you are looking for is "Toward's Hyperinflation"

Loads of past Fed publications have forewarned of what has gone on so far. Faber calls them Bernanke's "Mein Kampf", because just like Hitler's version, they make it quite obvious what his intentions are i.e to inflate and inflate until the bitter end, using activities that may be for the Fed illegal to indulge in too

regards

Alfie


Chris
16 Aug 10, 09:30
Kress cycles

Do you have thoughts on the work done by Samual J Kress in regard to his cycle theory?


Nadeem_Walayat
16 Aug 10, 19:18
Cycles

I'll write a book one day on analysis and forecasting.

But basically, I concluded during the early 1990's that when taken INDIVIDUALLY, all technical analysis, economic indicators and theories cannot conclude in anything more accurate than a 50/50 coin flip.

And so far I have not had any reason to change my point of view.


Nadeem_Walayat
16 Aug 10, 19:22
US Inflation

You only have to look at the purchasing power of the currency to see how much inflation the fed has created over the last 100 years. The dollar has lost 96% of its purchasing power ? Thats a lot of inflation !


William K
19 Aug 10, 21:49
12,500 then what?

Hi Nadeem,

I love the Blogosfear term, you are the man.

I'm believing in your call for 12,500, but then what?

I'm dying to go short this market for demographic baby boom reasons, but don't want to jump the gun.

Do you think the baby boom peak spending theory is valid (i.e., 2010 is the final spending peak for the US baby boomers and then down until 2023), or are we on to a new high in 2011?

Thanks,

Bill


Paul
19 Aug 10, 21:50
Gold

Nadeem

Just wondering if the next in depth Gold analysis is heading our way shortly. Surely must be bumping its way up the queue?

Best

Paul


Nadeem_Walayat
19 Aug 10, 22:06
Analysis

Hi

I have a long list of markets to analyse, which given the amount of effort required usually means I can only do these at weekends.

However my primary focus is the UK housing market at this time as I need to answer the question when should I buy.

That and I want to know what GBP is going to do, those are ahead of both gold and the dow in terms of wanting to know what they will do next.

So my next forecast will probably be on GBP as the UK analysis is a long way off froma final conclusion.

Best

NW


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife